UK.gov to grab fistful from £150m city broadband pot to pay for digi skills

Win for small biz AND Virgin Media - but will townies suffer speed lag?

One of Neil Berkett's final acts as Virgin Media chief was to lobby the government to rethink its broadband spending plans in urban areas - and instead demand that at least some of the £150m set aside by the Treasury be plowed into digital skills for small businesses.

The telco, which was recently scooped up by telecoms giant Liberty Global, wants the government to leave the building of faster city networks to private companies.

It underlined that point in a statement to The Register today:

The market is delivering next generation services in towns and cities and government has recognised spending public money on building new broadband infrastructure in these areas is not the best way forward.

It’s critical public money is spent where it’s needed most: investing in the digital skills, access and training that could benefit UK businesses by £18bn.

It would seem, then, that the Department for Culture, Media and Sport - which is tasked with delivering faster broadband download speeds of at least 2Mbit/s across Blighty by 2015 - has scaled back its urban ambitions, which intends to create 22 "super-connected cities".

It's now been watered down to a voucher scheme reportedly following a legal challenge against the fixed line element of the project from BT and Virgin Media, at least that is according to the Guardian.

The DCMS and BT have told El Reg that no legal complaint had been lodged, however, and said that the Graun had got its facts wrong.

Here's BT's statement on the matter:

The government’s proposed voucher scheme for super-connected cities is not the result of any legal challenge. The voucher scheme option is being pursued as a practical means of contributing state funds to the deployment of fibre infrastructure in unserved parts of the participating cities.

BT is working with DCMS/BDUK and the rest of the UK industry to deliver a workable voucher based scheme to bring high speed broadband services to SMEs and others in the participating cities using the £150m allocated by government.

BT would also be keen to participate in wider infrastructure build schemes in cities where suitable state aid approval for such a scheme in UK cities is available, but this is currently not the case.

The DCMS opened a month-long public consultation on Tuesday, calling on small biz outfits, ISPs and others to comment on Maria Miller's department's objectives, design principles, and operation of the scheme.

It said:

The purpose of the vouchers scheme is to stimulate the market to improve digital connectivity in participating cities. It particularly aims to benefit small and medium enterprises (SMEs), helping cities to create and attract new jobs and investment, and make the UK a more attractive place for digital companies to come and do business.

All of which sounds an awful lot like the noises erstwhile VM boss Berkett made before resigning from the telco earlier this year.

We ask Miller's mandarins to clarify what was happening with the £150m plonked into the urban broadband pot by the Treasury.

"Although vouchers will form part of the package, it’s certainly not the only component," a DCMS spokesman said. "The Urban Broadband Fund will be invested in a range of high speed broadband projects that enhance business connectivity, drive economic growth and improve wireless coverage for SMEs, visitors and residents."

What this appears to mean, in effect, is that the £150m bundle is now being split into smaller sums of cash so as some of it can be siphoned off into paying for digital skills for small businesses. Berkett had, in March, called on the government to take at least half of Blighty's urban broadband deployment money to do exactly that.

The other key thing about the voucher scheme is that it won't be subjected to scrutiny from the competition wing of the European Commission.

Significantly, the DCMS recently told The Reg that Brussels' officials had warned that "a workable State Aid approval for infrastructure would require an investigation of between seven and 18 months. On this timescale, and with uncertainty over the eventual decision, cities would find it exceedingly difficult, if not impossible, to deliver completed infrastructure elements of their plans by 2015." ®